TV manufacturers such as Sony Corp, Samsung Electronics Co Ltd and Sharp Corp are learning that features such as razor-thin LED TVs are just not enough to stage a comeback in the United States.
On Tuesday, Best Buy Co Inc Chief Executive Brian Dunn told analysts that sales of 3D TVs had fallen behind industry expectations.
"There was confusion about 3D early (on)," Dunn said. "It was a little short on content."
The largest U.S. electronics chain cut its full-year profit forecast, and its disappointing results put pressure on shares of Best Buy -- and other electronics companies.
"The fund got killed today," said Frank Ingarra, a co-portfolio manager of Hennessy Funds, which holds 32,000 shares of Best Buy. The retailer's shares dropped 15.5 percent to $35.25 in afternoon New York Stock Exchange dealings.
Despite better-than-expected November retail sales performance, consumers are holding off on big-ticket purchases, like TVs with the latest bells and whistles.
Investors are now demanding to know why retailers aggressively pushed a new generation of TVs after many consumers had just upgraded to their first flat-screen sets this year.
"People don't understand the added benefit of 3D," Ingarra said. "When you get into $2,000 TVs, you start thinking: 'At what point do I really need this, and is it going to make my viewing experience that much better?'"
Consumers are also put off by the need to purchase expensive 3D glasses to go along with the new TVs, said NPD analyst Ross Rubin. Some 3D content has also made viewers nauseous.
"If the 3D content hasn't been produced well -- if it has been aggressive on certain kinds of effects -- that can result in discomfort for viewers," Rubin said.
This holiday, consumers are more interested in buying TVs with bigger screens, rather than pricier ones with more features, Rubin said.
Sales of TVs with Google Inc's Google TV software, which lets viewers surf the Web directly from TV sets, were also hurt as consumers realized they could find the same services, like movie service Netflix Inc, elsewhere.
"People can also buy lower-priced alternatives to connected TVs, be it video game players, Blu-ray players or Apple TV."
(Reporting by Liana Baker; Editing by Kenneth Li and Gerald E. McCormick)